By Brendan Conway

The Russell 2000 index of small stocks broke through the 1,000 level for the first time in its history this morning. If you’re thinking that you need to be choosy when it comes to the high-risk, high-reward niche of small stocks after such a great run, well, you’re not alone.

But here’s the rub: You may be overthinking the problem. Certainly a great many fund managers in the smallcap niche have been suffering from undue caution and choosiness.

About the size of managers’ smallcap allocations.

Credit Suisse’s smallcap strategist Lori Calvasina writes to clients with a bunch of interesting data points on this subject. Smallcap fund managers ended the first quarter underinvested in smallcaps and especially in the smallest companies bearing the label, according to her research. In fact, they ended the first quarter near 10-year highs in their cash holdings. It’s a clear sign that managers have been trying to be as choosy as possible.

But a buy-and-hold investor might have been able to beat many, if not most managers simply by owning iShares Russell 2000 Index Fund (IWM), up about 17% on the year, a broad, simple and straightforward ETF. Investors have also done well using a twist on smallcap investing styles, for instance via the iShares Russell 2000 Value Index Fund (IWN), up about 16%, or iShares Russell 2000 Growth Index Fund (IWO), up nearly 19%. There’s even a PowerShares S&P SmallCap Low Volatility Portfolio (XSLV).

Or you could try your hand at defining particular objectives, like Calvasina has done. She hunted for stocks that have been owned by fewer than 50 small cap funds in the firm’s universe of data, have between a $500 million and $1.5 million market value, enjoy a favorable investment rating from her employer’s sell-side analysts, and have suffered an underweight from smallcap managers, among other screens for favorable, investable characteristics.

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